David Willetts: I beg to move,
	That this House notes with concern the increase in the number of young people not in employment, education or training and the fall in the number of apprenticeship starts; further notes that there will be a shortage of university places in 2010 and that the continuing problems with the Student Loans Company will impact on those students beginning their studies this year; calls on the Government to clarify its position on university places after the annual Higher Education and Funding Council for England grant letter and on imposing fines on those higher education institutions that take on more students to meet the 50 per cent. participation target; further calls on the Government to consider proposals for the rapid expansion of apprenticeships and to free further education colleges from stifling bureaucracy so they may meet the needs of young people; and urges the Government to offer 10,000 additional university places in order to build aspiration, opportunity and a competitive economy.
	The basis for the motion is very simple: sadly, it is a widely recognised fact that young people in our country are the first and worst victims of this recession. The shocking figures are all too familiar. The number of young people not in education, employment or training is now more than 1 million-it is 1,082,000. The rate of youth unemployment in Britain, with 950,000 young people unemployed, is one of the worst in Europe. In fact, it is a sad irony that the Government were first elected in 1997 on a pledge card that they would reduce youth unemployment by 250,000. Under their watch, it has risen by more than 250,000 since then. That is a very serious challenge to us all.
	This is not just about youth unemployment or the fact that young people have been the first and worst victims of the recession. It looks as though the higher education and training budget has proved to be one of the first and worst victims of the fiscal crisis that the Government have created. The Opposition understand the need for tough measures and for public spending to be brought down, because that is the mess that the Government have created and that has to be tackled. However, we have called this debate because we want to hear from the Minister what measures the Government are taking to tackle the crisis, and a full explanation of how he believes the cuts that have been announced in stages over the past few months will impact on universities and colleges. I have to say to the Minister that the suspicion is that the Department he that represents has fallen victim to the political arguments in the Labour Government between- [ Interruption. ] The Minister denies it, but not with an entirely straight face. The arguments are between the Secretary of State for Children, Schools and Families, who famously said on 20 September 2009,
	"I said...that I wanted to see us carrying on with real terms rises in our key public services"-
	we will not hear the word "cuts" pass his lips-and the First Secretary of State, Lord Mandelson, who said on 14 September 2009 that
	"spending in some areas will be reduced".
	When challenged on whether front-line services would be under the spotlight, Lord Mandelson said:
	"Everything is going to have to be examined."
	The First Secretary of State is making an example of his Department in a strategic debate that he is having with some of his Cabinet colleagues about what approach the Government should take to the fiscal crisis. If that is what he is arguing as part of Labour party strategy, we should not be surprised that it looks like, so far, by far the biggest cuts have fallen within the budgets of higher and further education.
	It is worth being clear about what those cuts are, so it would be helpful if the Minister explained them properly. Our understanding is that a £180 million efficiency saving was announced in the 2009 Budget; a £600 million further reduction was announced in the autumn statements; and a £135 million further reduction was announced in a letter to the Higher Education Funding Council on 22 December. That adds up to what is believed to be a £915 million cut. What steps is he taking to deliver those reductions and what does he think they mean for the numbers of students and the quality of the student experience? We want to hold him to account, and universities need to know exactly what the cuts will entail.
	Buried at the end of the letter to the HEFC was a revealing figure that brought home the scale of the reductions. At the beginning of this period, in 2007-08 prices, the planned unit of funding-the amount of teaching support for students-was £4,140. According to the letter to the HEFC, that will fall to £3,950 in 2010-11 in constant prices. That looks to be the key figure, and it is contrary to all the assurances we have had that teaching would be protected as part of this exercise. How does the Minister plan to deliver those significant reductions in the higher education budget?
	We also hope to hear from the Minister about what the reductions mean for the number of student places. We are close to the 15 January deadline for applications-we understand that it was extended by a few days because of the weather-but can he indicate to the House how many university applications he expects this autumn? From provisional figures collected earlier in the year, we know that we were already looking at a 12 per cent. increase in applications for 2010 on top of applications in 2009-and 2009 was itself a record year.
	We understand the reasons for those big increases in applications. With high rates of unemployment, many more young people apply to go to university, and of course there was a mini baby boom in the early '90s, which means that there is now a large number of 18 and 19-year-olds in that cohort. We want to hear from the Minister how many places will be available at universities for this further surge in the number of applicants. The fear is that there will be an increase in the number of young people applying and an absolute decline in the number of places available for them.
	That would be an extraordinary position for the Government to have got themselves into. They have an official target of getting 50 per cent. of people into university. First the Government set the target, and then last year universities offered extra places for those students. Now, however, we are told that institutions will be fined for taking on those extra students. This must be the first time a Government have fined an institution for taking the steps necessary to reach the Government's own announced target-in this case, of more people going to university.
	The Opposition do not believe in artificial targets, such as the 50 per cent. target, and are comfortable with the Robbins principle, which states simply that
	"courses of higher education should be available to all those who are qualified by ability and attainment to pursue them and who wish to do so".
	That seems to us a much more sensible approach than artificial targets. At the same time, we have practical proposals for how we could find more places for students in the crisis year of 2010.

David Willetts: We have made a simple and cautious assumption that by summer 2010, there will be £30 billion of outstanding student debt. We believe, from looking at similar but not identical schemes in New Zealand and Australia, that it is reasonable and cautious to assume that 1 per cent. of that debt will be repaid early-£300 million.
	In order to avoid the problems now faced by Ministers, which the hon. Member for Blackpool, South (Mr. Marsden) mentioned, we have fully costed university places. We have not used places costing less than the average-if anything, we have costed them slightly more highly than we believe is the average. We have said that a university place costs £10,000 a year in total public funding, which includes maintenance and teaching support. Over three years, therefore, the full cost in public expenditure of a student place is £30,000, which means that the £300 million that we have identified would provide an extra 10,000 places.
	That is a carefully costed, fully explained model that does not-this touches on the concerns that the hon. Gentleman expressed-involve any reduction in the unit of resource per student. Those would be extra places on top of the Government's planned number of student places. Given that we are waiting for the proposals from Lord Browne's funding review, and given the inexorable looming crisis and special circumstances facing us this summer, that is the right thing to do. Unlike Ministers, who appear to be proposing a reduction in the number of places for students just when there is a surge in applications, we are confronting a practical problem that needs addressing, because the Conservative party cares about educational opportunities for young people who wish to go to university.
	When Ministers announced their latest round of cuts before Christmas, they talked about delivering more education courses for students through two-year degrees. We fully understand the case for such degrees. They are by no means a complete solution to the pressures faced by universities, but they are the kind of option that they have to consider. As so often happens with the Government, however, they proposed apparently new ideas that in reality have been around for some time and which they themselves have been undermining through their own policies. Will the Minister confirm, therefore, that in the same week that the briefing was issued saying that we should not worry about the public expenditure reductions because in future we would have so many two-year courses, the HEFC announced a reduction in funding for foundation degrees, which are one way in which the shorter courses are delivered? Such initiatives are already in the system. The HEFC has said that it will
	"reduce the funding provided through the targeted allocation to support foundation degrees, and keep this under review in light of any further requests for efficiency savings."
	So at the same time that this supposedly radical new approach to universities is being floated, the funding for the initiative that is supposed to bring it to pass is quietly being strangled. That is an example of the Government's spin running along completely detached from the reality.
	We are pleased that Lord Browne's review is a funding review-something that we pressed for-and not simply a fees review. We hope that it will tackle the underlying problems and pressures facing universities. Meanwhile, we are concerned to tackle the challenge that our universities will face in 2010, because we do not believe that the Government are doing so.
	While we have the Minister here in the Chamber, let me ask him about another concern, which we realise many students still face, namely the continuing operational problems of the Student Loans Company. Let me remind the House of how the Government launched the policy in July 2006 and of the expression used by the previous Higher Education Minister, the hon. Member for Harlow (Bill Rammell). For those of us on the Opposition Benches who wrestle with our constituents' problems, it is worth reminding the House that the case for the new system was that it would result in
	"clearer information, faster decisions, timely payments and accurate repayments."
	That is what we were promised in 2006, when the policy was launched. Since then, of course, we have had a shocking report, revealing not just the many cases of maladministration and incompetence, but problems that go back to the Department, which was endlessly chopping and changing the rules for student maintenance, creating a system that was far too complicated for the Student Loans Company to administer.
	I hope that the Minister will tell the House, first, how many students are still waiting for their student grant forms to be processed and for the money to be received; secondly, how many disabled students in particular are still suffering from such problems; and thirdly, what assurance he can give us that the problems that are still hanging over from last year will not interfere with the efficient handling of new claims for 2010, which are starting now. We know, from the spirals of problems that the tax credits system, the Rural Payments Agency and the Child Support Agency have got into, that the real problems start when we do not sort out the first year's problems before the second year of cases arrive. That is why the issue is so important. We need to know that the overhang of historical problems will not affect the next round of student applications.